Gold loans are the most convenient loans for people who need immediate cash at a reasonable interest rate. The process of taking loans against gold has been prevalent in this country for years. Many financial institutions in India now offer gold loans at attractive rates of interest. When a lender provides gold loans to applicants, he/she determines the market value of the gold and sets up an interest rate for the loan amount. Often people take up the gold loan from one bank and then move to another bank that offers a better deal on loans against gold. This process of moving from one lender to another is called a gold loan balance transfer.
Before indulging in this process, compare the bank’s schemes and see which of them offers the best deal on gold loans. A gold loan balance transfer can help people in various ways. Here, we are going to see how to transfer a gold loan from one bank to another.
The gold loan transfer process
The gold loan transfer process is straightforward. Plus, this way you can save more money. To move a gold loan from one lender to another, follow the steps below:
Share your gold trust card
When taking a gold loan from a bank, you must secure a pledge card. If you want to transfer the loan to another bank, you need to share the existing trust or pledge card with the new lender/bank. This is the first step of the transfer process.
Validate the loan amount that you have just calculated
After you provide the new bank with all your gold details, you will receive a newly calculated loan amount. You have to just confirm the details, to continue the gold loan transfer process.
Finish the KYC procedure
Once you have confirmed the loan amount, as a borrower, you need to complete the KYC procedure. It is a mandatory part of the gold loan balance transfer. It takes generally a few minutes to complete this process. Also, the lenders may ask for some documentation that you must attach with the KYC.
Pay the interest amount to the existing lender
To start with transferring a gold loan, you need to pay the interest amount to the ex-bank. After you make the payment, you can transfer your article to the new lender.
Finish the transfer process
Once you pay the gold loan interest amount to the original bank, you can initiate the transfer procedure with the new lender/bank.
Benefits of gold loan transfers
Moving gold loans from one lender to another adds up to many advantages. These are as follows:
Repayment options are flexible
With a gold loan transfer, you can get flexible repayment choices. You can use these alternatives to repay your loan amount within flexible repayment tenures and payment cycles.
Interest rates are better
Many banks offer higher interest rates on gold loans along with the LTV ratio. If you avail of a gold loan transfer, you can choose a bank/lender that would offer lower interest rates. This would make your loan process more reasonable.
Per gram, rates are higher
Many banks offer loans of up to 65% and NBFCs offer loans of up to 75% of the gold that the debtor provides as collateral. In such cases, you must transfer the gold loan to a provider offering a higher loan to value (LTV) ratio than the original lender. This allows customers to avail of a loan that is the same and true to the value of their gold assets.
Ensures security of gold
Gold has always been an emotional factor to the Indians. Thus, you must make sure that your article is stored in a safe bank locker. If you take a gold loan transfer with the right provider, you can ensure gold security.
Eligibility for gold loan transfer
The eligibility criteria for gold loan transfers differ from one lender to another. However, there are some common eligibility factors.
- Applicants, who belong to the age group of 18-75 can avail of this.
- You need to pay 1-5% of your remaining principal on your gold loan to the original lender.
- You must pay 6-12 EMIs to the existing lender depending on your loan amount.
- The gold used as collateral must be in the 18-22K range.
Documents for gold loan transfer
When you are transferring a gold loan, the new lender would request some essential documents.
- Application form for a gold loan.
- Voter’s Card, Aadhaar Card, PAN Card, Driving Licence, Job Card, etc.
- Identity proof
- Address Proof: Utility bills, ownership/lease/rent certificate, Passport, etc.
- Passport-size photographs
Hence, to get a higher value on your gold articles you can seek a gold loan transfer. Note that many financial institutions do not provide this service. So, make sure you compare the best gold loan deals and transfer your gold possession to a good place.